Ruth Marcus: Here we go again

First fiscal fight was just a warm-up

Last week, I described the "fiscal cliff" deal as a pathetic punt. In light of later developments, I am worried that characterization was overly optimistic.

The punt part stands: The expiration of the Bush tax cuts, and Republican desire to continue them in perpetuity, represented a point of maximum leverage to obtain a grand-enough bargain on tax revenue and entitlement reform.

That moment was squandered, perhaps irretrievably. "We should never, ever, ever try another grand bargain, at least until the president is willing to lay all his cards on the table," Tennessee Republican Sen. Bob Corker told me. Corker's comments are all the more depressing because he is a political realist who laid out his version of a grand bargain during the cliff talks - a bargain, by the way, that would have yielded way more in new tax revenue than what President Barack Obama received in the deal.

But the elusiveness of the bargain is not the reason for my growing pessimism. My glumness stems from the imminence of three new cliffs - most importantly, the government's bumping up against the debt ceiling - combined with Republicans' stated refusal to accept any new taxes beyond what was just agreed to.

No new taxes was Senate Minority Leader Mitch McConnell's message as he made the rounds of last Sunday's talk shows. "The tax issue is finished, over, completed," he told ABC's George Stephanopoulos. "That's behind us."

Perhaps this is just a bargaining position, but McConnell is too canny to be so dogmatic if he envisions ultimately having to back down. And other Republicans more open to raising revenue than McConnell have been similarly insistent. Of President Obama's ability to win new tax revenue, Tennessee Sen. Lamar Alexander told me, "He just lost that opportunity - that's gone."

Which sets up the following conundrum:

(1) The president says he will not negotiate on the debt ceiling.

(2) The president says he will not accept a spending-only deal. "If Republicans think that I will finish the job of deficit reduction through spending cuts alone ... then they've got another thing coming. That's not how it's going to work," Obama said even before the House voted on the cliff deal.

(3) Republicans say they will not accept new revenue.

(4) Republicans say they will increase the debt ceiling only in exchange for equivalent spending cuts.

The first two positions cannot be squared with the second two. Someone's going to have to blink.

The White House is betting it will be Republicans. Administration officials point to warnings from former House Speaker Newt Gingrich about using the debt ceiling as a negotiating tactic. They note that McConnell shied away from repeating debt ceiling threats, and that House Speaker John Boehner, in an interview with The Wall Street Journal, described the debt ceiling as "not the ultimate leverage."

As the administration sees it, Republicans, having been forced to yield on tax rates and revenue, will capitulate again on governing-by-extortion over the debt ceiling. Republicans, in this assessment, are unprepared to shoot the hostage, and their business allies will not permit it. The other points of leverage - a government shutdown as spending authority expires, or allowing the spending sequester to take effect after the two-month delay - will also prove too painful and dangerous for Republicans to exploit, this argument goes. Meanwhile, confronted with the shiny bauble of tax reform and lower rates, Republicans will prove more willing to accept additional revenue.

Maybe, but this assumes a lot more rationality on the part of Republicans, particularly House Republicans, than the record supports. "When you have a party so deeply divided, with so much anger directed at one another, with constituency groups that are so hard-line, it is very difficult to see how Boehner can lead them to a place where they can get a deal done" with the president and congressional Democrats, House Minority Whip Steny Hoyer told me. "The angst is justified."

And it fails to factor in Republican skepticism that Obama will stick to his I'm-not-negotiating guns. The president peered over the edge of the fiscal cliff and retreated with far less than the bargain he sought. How much credibility does he have with blustering over the far more dangerous situation of the national credit rating?

"I've seen this guy in action and he's not going to let it happen," one senior congressional aide told me. "He will blink." Here's the scary part: This scornful assessment comes from a Democrat.

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Ruth Marcus: Here we go again

Columnist Ruth Marcus says her earlier assessment of the fiscal cliff deal as a pathetic punt may have been Ioverly optimistic.